The Financial Services Commission (FSC) of South Korea has notified that users who deposit digital assets in exchanges will be eligible for interest. However, nonfungible tokens (NFTs) and central bank digital currencies (CBDCs) are exempted from the regulations
Local media agencies reported on December 10 that the FSC intends to issue the legislative guidance. The regulatory body acknowledged that exceptions may exist despite the prohibition of NFTs.
As per the report, tokens issued in significant quantities and operating as a payment method despite being classified as NFTs may still be incorporated into the virtual asset classification. The assets may, therefore, qualify for interest when deposited into exchanges.
In addition to assigning classifications to virtual assets, the South Korean regulator also established guidelines for virtual asset administrators managing user deposits.
The notice emphasized that exchanges must segregate user deposits from their assets before transferring the former to a bank. A chilly wallet is also needed to store 80% of the coins.
The guidance will additionally encompass prerequisites for readiness for breaches or other computer-related incidents. According to the regulator, insurance enrollment or reserve accumulation is required for virtual asset service providers. Additionally, except in extreme circumstances and at the behest of financial regulators and courts, the law prohibits blocking deposits or withdrawals.
South Korea has been strengthening its crypto-related regulations. The nation’s financial regulators requested users to report unlicensed cryptocurrency exchanges that provide services within the region earlier in December. South Korea’s Financial Intelligence Unit and the Digital Asset Exchange Association oversaw the undertaking.
